Financial institutions represent a very important part of the financial system that has the function of collecting money and placing them on the financial market. Within the framework their activity, they participate in the creation of external debt. The Republic of Croatia faces years of high foreign debt, the moust important causes of the high foreign debt of the Republic of Croatia being: the deficit of the state budget, the interest arbitrage of the banks and the real appreciation of the domestic currency. Reality shows that countries are increasingly and more heavily indebted, with some being bigger and others to a lesser extent. Each state in its own way tries to keep the debt with in the limits of control and to limit its increase. They should take into account the amount of debt and the possibility of its repayment, as the consequences of (pre) large debts can significantly affect the economic growth of the country. The Republic of Croatia is a particularly worrying fact of the unfavorable growt trend of the external debt, while the dynamics with which Croatia's foreign debt (long-term) is growing is not economically viable.